Full Report

Executive Summary

Press Release

Commission Issues Urgent Call to Strengthen Oversight of Billions of Dollars in State and Local Bonds

The Little Hoover Commission, in a report sent Tuesday to Governor Brown and the Legislature, called for more consistent oversight and greater transparency for public spending financed by state and local bonds.

“Californians have been exceptionally generous in their willingness to incur long-term debt, borrowing more than $1.5 trillion over the past three decades to pay for schools, roads and other public works projects,” said Commission Chair Pedro Nava. “But as debt piles up on the public credit card, it consumes a growing slice of the budget pie. When times get tough and budgets get cut, paying back borrowed money is never going to be on the chopping block,” he added. “That’s why it is so important that we spend bond proceeds carefully and as voters intended.”

Borrowed Money: Opportunities for Stronger Bond Oversight provides an update to a June 2009 Commission report, Bond Spending: Expanding and Enhancing Oversight. The 2017 update acknowledges progress to better account for statewide bond spending but found inconsistencies across state programs. The report applauds one state website that shows how and where bond proceeds from the 2014 water bond are being spent, but noted that information on the high-speed rail bond is difficult, if not impossible to find. The report cites shortcomings in accountability for a 2006 school construction bond and agrees with Governor Brown’s call for improved oversight of the 2016 school facility bond in his January 2017 budget proposal.

The Commission suggests he and the Legislature go further and develop a framework for oversight for all statewide bonds and also require information on all statewide bond spending be readily available online in a format that is easily understandable. The Commission also sees promise in a 2016 law (SB 1029) that expands the authority of a committee under the State Treasurer to collect information on state and local debt, which will add more data to the Treasurer’s Debt Watch website.

California voters have been equally supportive of local bonds, with approximately $28 billion in local bond measures enacted in 2016 alone, nearly all under the reduced voter threshold allowed by a ballot measure enacted in 2000. State law requires schools districts using the reduced voter threshold to create Citizens Bond Oversight Committees to keep a watchful eye on spending. With 210 local school bond measures enacted last year, some 1,400 Californians will join thousands more already serving on these committees. In its report, the Commission found that these committee, while well intentioned, often do not live up to the promise of improved oversight. The report lays out specific changes to bolster their effectiveness, including improved training and greater clarity on their authority.

The Little Hoover Commission is a bipartisan and independent state agency charged with recommending ways to improve the efficiency and effectiveness of state programs. The Commission’s recommendations are submitted to the Governor and the Legislature for their consideration and action. For a copy of the report or documents from the Commission’s September 2016 public hearing, visit the Commission’s website: www.lhc.ca.gov.

Fact Sheet

Study Description

For this study, the Commission re-visited its 2009 review of bond oversight in California. With a $9 billion statewide school bond measure on the November ballot and $5.5 billion in local bond measures enacted by voters in June 2016 alone, this review provided an opportunity for the Commission to update its assessment of the state’s mechanisms to ensure bond money is spent efficiently and effectively and as voters intended.

In its 2009 report, Bond Oversight: Expanding and Enhancing Oversight, the Commission recommended expanding legislative oversight and independent audits and streamlining and improving Web-based reporting on bond expenditures. The Commission also recommended reconstituting the California Water Commission and giving it a role in managing natural resource bonds. Additionally, the Commission recommended bolstering local bond oversight committees.

The Commission also recommended improving transparency and clarity for voters, including a simple and easy-to-understand chart in the voter guide identifying how much a statewide bond measure will cost and the revenue source the state will use to repay the bond. This recommendation was implemented through legislation in 2011 and has resulted in a state bond cost estimates box at the top of any bond measure on a statewide ballot.

This 2016 update provided an opportunity to assess the progress, or lack thereof, in implementing the Commission’s 2009 recommendations and uncover any additional opportunities to improve oversight of bond expenditures.

In 2015, State Treasurer John Chiang convened a Task Force on Bond Accountability and legislation to implement the recommendations from this group, SB 1029 (Hertzberg), which is currently under consideration by the Legislature. If enacted, this legislation will improve transparency and accountability. As part of its review, the Commission assessed whether this legislation, if enacted, will lead to the type of transparency the Commission envisioned or if additional measures are necessary.

Additionally, the Commission looked at whether reconstituting the California Water Commission has led to improved oversight of natural resource bond spending, as intended by the 2009 recommendation.

Finally, in 2009, the Commission made specific recommendations for improving oversight of local bond measures, particularly by bolstering local bond oversight commissions. These recommendations included mandatory training for bond oversight committee members and changes in the member-appointing authorities. They also included better defining in statute the role and responsibilities of the local committees and the purpose and objectives of annual financial and performance audits of school construction bonds enacted under the reduced voter threshold established in 2000 through Proposition 39.

In its 2009 report, the Commission saw great potential in the thousands of eyes and ears on the ground serving on local bond oversight committees. As part of this review, the Commission assessed whether the recommendations it made in 2009 are still valid or if other or additional measures are necessary to ensure local bond accountability. The Commission also assessed opportunities to overcome the logjam that has prevented progress in improving local bond oversight.

Previous Studies

Agenda

Overview

In this report, the Commission calls for more consistent oversight and greater transparency for public spending financed by state and local bonds. This report updates and builds on recommendations the Commission made in a June 2009 report, Bond Spending: Expanding and Enhancing Oversight.

The 2017 update acknowledges progress to better account for statewide bond spending, but found inconsistencies across state programs.

The Commission urges the Governor and the Legislature to develop a strategy for oversight of all statewide bond measures that links bond expenditures with results and makes this information easily available to the public.

The Commission also urges policymakers to assess and improve local bond oversight. Specifically, the Commission recommends that policymakers update and overhaul statutory code enacted in 2000 that created Citizens’ Bond Oversight Committees for local school facility construction bonds. This includes a list of specific changes, including improved training for committee members and enhanced performance audits that assess the effectiveness and results of the bond program, as well as other opportunities for improvement.

February 13

2017

Bond Oversight

2:00 p.m., 925 L Street, Conference Room 175, Sacramento, CA

Public Meeting

Public Notice

PUBLIC NOTICE

On Monday, February 13, 2017, the Little Hoover Commission will conduct a meeting to discuss and consider a draft report on bond oversight. The meeting will begin at 2:00 p.m. in conference room 175 located on the first floor of 925 L Street in Sacramento, CA.

Additional teleconference locations accessible to the public during the meeting will be:

634 South Spring Street, Suite 920, Los Angeles, CA 90014

3750 University Avenue, Suite 610, Riverside, CA 92501

1415 L Street, Suite 800, Sacramento, CA 95814

2440 Fifth Avenue, San Diego, CA 92101

425 S Palos Verdes Street, San Pedro, CA 90731

1114 State Street, Santa Barbara, CA 93101

12456 Ventura Boulevard, Suite 1, Studio City, CA 91604

All public notices for meetings are on the Commission’s website, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Commission Executive Director Carole D’Elia at (916) 445-2125 or littlehoover@lhc.ca.gov by Monday, February 6, 2017.

PUBLIC NOTICE

On Thursday, September 22, 2016, the Little Hoover Commission will conduct a public hearing to revisit oversight of bond expenditures in California. The hearing will begin at 9:30 a.m. in Room 437 of the State Capitol in Sacramento.

At the hearing, the Commission will hear from the deputy treasurer for public finance at the State Treasurer’s Office, who will describe recent Legislative developments toward improving transparency and oversight of statewide bond expenditures. Next, co-chairs of the State Treasurer’s Office 2015 Task Force on Bond Accountability will provide an overview of the task force findings and recommendations. The Commission also will hear from the president of the California League of Bond Oversight Committees (CaLBOC), a member and secretary of the West Contra Costa Unified School District’s Citizens’ Bond Oversight Committee and chair of the Sweetwater Union High School District Bond Oversight Committee. They will recommend measures the state can take to improve the effectiveness of local bond oversight committees. Finally, the deputy assistant secretary for bonds and grants at the Natural Resources Agency will discuss measures the agency has taken to improve accountability and transparency of natural resource bond expenditures.

There will be an opportunity for public comment at the end of the hearing. Public comments will be limited to 3 minutes per person. The Commission also encourages written comments. The Commission will convene a brief business meeting at 12:30 p.m. to discuss a draft report on Occupational Licensing. Immediately following the hearing, the Commission will reconvene its business meeting in the Legislative Counsel Conference Room on the lower level of 925 L Street in Sacramento, California. An additional teleconference location accessible to the public during the business meeting will be at 1200 16th Street NW in Washington, DC.

All public notices for meetings are on the Commission’s website, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Commission Executive Director Carole D’Elia at (916) 445-2125 or littlehoover@lhc.ca.gov by Thursday, September 15, 2016.

Video

February 13

2017

Bond Oversight

2:00 p.m., 925 L Street, Conference Room 175, Sacramento, CA

Public Meeting

Public Notice

PUBLIC NOTICE

On Monday, February 13, 2017, the Little Hoover Commission will conduct a meeting to discuss and consider a draft report on bond oversight. The meeting will begin at 2:00 p.m. in conference room 175 located on the first floor of 925 L Street in Sacramento, CA.

Additional teleconference locations accessible to the public during the meeting will be:

634 South Spring Street, Suite 920, Los Angeles, CA 90014

3750 University Avenue, Suite 610, Riverside, CA 92501

1415 L Street, Suite 800, Sacramento, CA 95814

2440 Fifth Avenue, San Diego, CA 92101

425 S Palos Verdes Street, San Pedro, CA 90731

1114 State Street, Santa Barbara, CA 93101

12456 Ventura Boulevard, Suite 1, Studio City, CA 91604

All public notices for meetings are on the Commission’s website, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Commission Executive Director Carole D’Elia at (916) 445-2125 or littlehoover@lhc.ca.gov by Monday, February 6, 2017.

PUBLIC NOTICE

On Thursday, September 22, 2016, the Little Hoover Commission will conduct a public hearing to revisit oversight of bond expenditures in California. The hearing will begin at 9:30 a.m. in Room 437 of the State Capitol in Sacramento.

At the hearing, the Commission will hear from the deputy treasurer for public finance at the State Treasurer’s Office, who will describe recent Legislative developments toward improving transparency and oversight of statewide bond expenditures. Next, co-chairs of the State Treasurer’s Office 2015 Task Force on Bond Accountability will provide an overview of the task force findings and recommendations. The Commission also will hear from the president of the California League of Bond Oversight Committees (CaLBOC), a member and secretary of the West Contra Costa Unified School District’s Citizens’ Bond Oversight Committee and chair of the Sweetwater Union High School District Bond Oversight Committee. They will recommend measures the state can take to improve the effectiveness of local bond oversight committees. Finally, the deputy assistant secretary for bonds and grants at the Natural Resources Agency will discuss measures the agency has taken to improve accountability and transparency of natural resource bond expenditures.

There will be an opportunity for public comment at the end of the hearing. Public comments will be limited to 3 minutes per person. The Commission also encourages written comments. The Commission will convene a brief business meeting at 12:30 p.m. to discuss a draft report on Occupational Licensing. Immediately following the hearing, the Commission will reconvene its business meeting in the Legislative Counsel Conference Room on the lower level of 925 L Street in Sacramento, California. An additional teleconference location accessible to the public during the business meeting will be at 1200 16th Street NW in Washington, DC.

All public notices for meetings are on the Commission’s website, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Commission Executive Director Carole D’Elia at (916) 445-2125 or littlehoover@lhc.ca.gov by Thursday, September 15, 2016.

Video

February 13

2017

Bond Oversight

2:00 p.m., 925 L Street, Conference Room 175, Sacramento, CA

Public Meeting

Public Notice

PUBLIC NOTICE

On Monday, February 13, 2017, the Little Hoover Commission will conduct a meeting to discuss and consider a draft report on bond oversight. The meeting will begin at 2:00 p.m. in conference room 175 located on the first floor of 925 L Street in Sacramento, CA.

Additional teleconference locations accessible to the public during the meeting will be:

634 South Spring Street, Suite 920, Los Angeles, CA 90014

3750 University Avenue, Suite 610, Riverside, CA 92501

1415 L Street, Suite 800, Sacramento, CA 95814

2440 Fifth Avenue, San Diego, CA 92101

425 S Palos Verdes Street, San Pedro, CA 90731

1114 State Street, Santa Barbara, CA 93101

12456 Ventura Boulevard, Suite 1, Studio City, CA 91604

All public notices for meetings are on the Commission’s website, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Commission Executive Director Carole D’Elia at (916) 445-2125 or littlehoover@lhc.ca.gov by Monday, February 6, 2017.

PUBLIC NOTICE

On Thursday, September 22, 2016, the Little Hoover Commission will conduct a public hearing to revisit oversight of bond expenditures in California. The hearing will begin at 9:30 a.m. in Room 437 of the State Capitol in Sacramento.

At the hearing, the Commission will hear from the deputy treasurer for public finance at the State Treasurer’s Office, who will describe recent Legislative developments toward improving transparency and oversight of statewide bond expenditures. Next, co-chairs of the State Treasurer’s Office 2015 Task Force on Bond Accountability will provide an overview of the task force findings and recommendations. The Commission also will hear from the president of the California League of Bond Oversight Committees (CaLBOC), a member and secretary of the West Contra Costa Unified School District’s Citizens’ Bond Oversight Committee and chair of the Sweetwater Union High School District Bond Oversight Committee. They will recommend measures the state can take to improve the effectiveness of local bond oversight committees. Finally, the deputy assistant secretary for bonds and grants at the Natural Resources Agency will discuss measures the agency has taken to improve accountability and transparency of natural resource bond expenditures.

There will be an opportunity for public comment at the end of the hearing. Public comments will be limited to 3 minutes per person. The Commission also encourages written comments. The Commission will convene a brief business meeting at 12:30 p.m. to discuss a draft report on Occupational Licensing. Immediately following the hearing, the Commission will reconvene its business meeting in the Legislative Counsel Conference Room on the lower level of 925 L Street in Sacramento, California. An additional teleconference location accessible to the public during the business meeting will be at 1200 16th Street NW in Washington, DC.

All public notices for meetings are on the Commission’s website, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Commission Executive Director Carole D’Elia at (916) 445-2125 or littlehoover@lhc.ca.gov by Thursday, September 15, 2016.

Video

February 13

2017

Bond Oversight

2:00 p.m., 925 L Street, Conference Room 175, Sacramento, CA

Public Meeting

Public Notice

PUBLIC NOTICE

On Monday, February 13, 2017, the Little Hoover Commission will conduct a meeting to discuss and consider a draft report on bond oversight. The meeting will begin at 2:00 p.m. in conference room 175 located on the first floor of 925 L Street in Sacramento, CA.

Additional teleconference locations accessible to the public during the meeting will be:

634 South Spring Street, Suite 920, Los Angeles, CA 90014

3750 University Avenue, Suite 610, Riverside, CA 92501

1415 L Street, Suite 800, Sacramento, CA 95814

2440 Fifth Avenue, San Diego, CA 92101

425 S Palos Verdes Street, San Pedro, CA 90731

1114 State Street, Santa Barbara, CA 93101

12456 Ventura Boulevard, Suite 1, Studio City, CA 91604

All public notices for meetings are on the Commission’s website, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Commission Executive Director Carole D’Elia at (916) 445-2125 or littlehoover@lhc.ca.gov by Monday, February 6, 2017.

PUBLIC NOTICE

On Thursday, September 22, 2016, the Little Hoover Commission will conduct a public hearing to revisit oversight of bond expenditures in California. The hearing will begin at 9:30 a.m. in Room 437 of the State Capitol in Sacramento.

At the hearing, the Commission will hear from the deputy treasurer for public finance at the State Treasurer’s Office, who will describe recent Legislative developments toward improving transparency and oversight of statewide bond expenditures. Next, co-chairs of the State Treasurer’s Office 2015 Task Force on Bond Accountability will provide an overview of the task force findings and recommendations. The Commission also will hear from the president of the California League of Bond Oversight Committees (CaLBOC), a member and secretary of the West Contra Costa Unified School District’s Citizens’ Bond Oversight Committee and chair of the Sweetwater Union High School District Bond Oversight Committee. They will recommend measures the state can take to improve the effectiveness of local bond oversight committees. Finally, the deputy assistant secretary for bonds and grants at the Natural Resources Agency will discuss measures the agency has taken to improve accountability and transparency of natural resource bond expenditures.

There will be an opportunity for public comment at the end of the hearing. Public comments will be limited to 3 minutes per person. The Commission also encourages written comments. The Commission will convene a brief business meeting at 12:30 p.m. to discuss a draft report on Occupational Licensing. Immediately following the hearing, the Commission will reconvene its business meeting in the Legislative Counsel Conference Room on the lower level of 925 L Street in Sacramento, California. An additional teleconference location accessible to the public during the business meeting will be at 1200 16th Street NW in Washington, DC.

All public notices for meetings are on the Commission’s website, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Commission Executive Director Carole D’Elia at (916) 445-2125 or littlehoover@lhc.ca.gov by Thursday, September 15, 2016.